My US Bank Bailout Enchanted ...

Finally back to my beloved banks. We have "The Big Day" for US banks, as the (toxic) legacy asset "removal" is announced ...

The full official-doom here.
And here are some thoughts, in random order:

• Alea sees the final announcement as expected, and points out: " ...to reduce the likelihood that the government will overpay for these assets, private sector investors competing with one another will establish the price of the loans and securities purchased under the program".
• Krugman comes down a bit, after initial anger, but identifies: "Another way to say this is that by financing a large part of the purchase with a non-recourse loan, the government is in effect giving investors a put option to sweeten the deal".
• FT Alphaville says: "... it' s all about liquidity"
• WSJ Real Time Economics compiles the initial reactions by economists ...
• But the post by Felix Salmon has an excellent anonymous commenter:

"Isn't the big hurdle getting the banks to offer up their assets to the auction process by FDIC? Once they do that, whether they accept the bid or not, it seems hard to imagine they would be able to value the assets very much above the highest bid offered. For example, if the assets are valued on their books at 50% of face value, they offer them in the auction process and the highest bid is 30%, I would think it would require a little chutzpah to decline the bid and go back to valuing these assets significantly above what has been shown as a market price."

Stock market does not have many questions, as KBW Banks Index is up almost 13% on day one hour before cash market close. In contrast to the market, I am just wondering, while scrambling my ...I have a very simple observation here. Private capital participates with 7% equity in the "project", but takes 50% of profit after interest (and taxes)? I think the math is very simple here - if the bank holds the toxic legacy asset at a value in the books that is more than 7% above the realistic market price, any bank would participate in the private share of equity of "Bailout Enchanted", even without a bullish prediction of value of toxic legacy assets at maturity... even if they think that "bailout train" is going to crash. But bullish animal spirits, having a dream of recovery to nominal value at maturity, should be in euphoria!

There is even better sample of Geithner Put ...

This looks like true capitalism!

Well, guys, even if you assume 10% or 12% above market (including all fees), gimme more! More!